Ambitious Plan To Save Holden's Elizabeth Plant Is Halted

[William Maley]

Back in December, we reported on the ambitious plan of Guido Dumarey, owner of the Punch International to buy General Motors' Elizabeth plant and the assets to the Commodore to build out a new range of rear and all-wheel drive vehicles in Australia.

 

“Everything is planned. The next step is to inform all the parties with the right plan, and it happens next year. The announcement is that they will close in the end of 2017. In the first six months of next year we must work very hard to find solutions. Two thousand and sixteen is the key year. After ’16 we must not think about it, because all the programs have started to stop and it’s too late,” Dumarey told Motoring back in December.

 

That ambitious plan has come to a halt. CarAdvice reports that General Motors and Punch International released a joint statement today stating that deal to keep producing vehicles at Elizabeth was “not possible in this case". The reasons are the same as to why Ford, GM, and Toyota are ending production in Australia; a lack of scale, high production costs, and a contraction in the supply base.

 

Details of the plan and discussions cannot be discussed by either party due to a non-disclosure agreement.

 

The joint statement is below.

 

General Motors and Punch Corporation have undertaken and completed a detailed global evaluation of a proposal from Punch Corporation to continue manufacturing vehicles at Holden’s Elizabeth plant in South Australia.

 

Both parties concluded that a viable business model was not possible for this case. Therefore the proposal will not be taken forward.

 

GM and Punch have communicated on this decision.

 

As discussions have been governed by a Non-Disclosure Agreement, neither party involved is able to discuss details of the proposal, nor the assessment.

 

The challenges to domestic automotive manufacturing in Australia – lack of scale, high production costs, supply base contraction and increasing market fragmentation – persist and cannot be overcome for this business case.

 

In particular, the wind down of the supply base following the manufacturing exit of the three existing car makers, and the critical production mass they represent, is insurmountable.

 

GM thanks Punch Corporation for their proposal. GM will continue to consider Punch Corporation, along with other interested parties, to participate in the sale process of the Elizabeth plant and assets after GM ceases local manufacturing.

 

Punch Corporation will continue to pursue other business opportunities in the Australian automotive sector.

 

Source: CarAdvice

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[G. David Felt]

Sad but not unexpected. Australia has gotten so expensive to build stuff in. Truly a pure service country. Be interesting to see what it will take to reduce the cost of doing business in that little country.